RBI's MuleHunter.AI: A New Frontier in Combating Digital Financial Fraud

Finmin asks banks to use MuleHunterAI to check digital fraud

The Finance Ministry and RBI are urging banks to adopt AI tools, including the RBI-developed MuleHunterAI, to combat rising financial fraud. Mule accounts, often used by criminals to launder money, are being targeted through these advanced technologies and inter-bank collaboration. This initiative aims to protect citizens' funds and deter fraudsters.Finance Ministry on Friday asked banks and financial institutions to use artificial intelligence tools including MuleHunterAI developed by the Reserve Bank to rein in growing financial frauds. In a meeting chaired by Financial Services Secretary M Nagaraju, banks were asked to adopt best practices, leveraging cutting edge tools, and foster inter-bank collaboration to address mule accounts effectively. He emphasised that proactive measures are required to be taken to protect citizens' hard-earned money. "Protecting citizens' wealth is our shared responsibility," the Department of Financial Services (DFS) said in a series of posts on X. Banks are directed to adopt advanced technologies including artificial intelligence and machine learning solutions for real-time detection of mule accounts, it said. "Banks were also encouraged to explore and implement http://MuleHunter.AI, an AI/ML-driven model developed by RBI, to strengthen the detection and monitoring of mule accounts," he told representatives of I4C, RBI, NABARD and banks. Earlier in the day, the RBI asked banks to collaborate with its initiative MuleHunter.AI to weed out mule accounts which are used to commit financial fraud. A mule account is a bank account used by criminals to launder illicit funds, often set up by unsuspecting individuals lured by promises of easy money or coerced into participation. The transfer of funds through these highly interconnected accounts makes it difficult to trace and recover the funds. "Use of money mule accounts is a common method adopted by fraudsters to channel proceeds of frauds," Reserve Bank of India (RBI) Governor Shaktikanta Das said. Unveiling the December 2024 monetary policy, he said the RBI is currently running a hackathon on the theme 'Zero Financial Frauds' which includes a specific problem statement on mule accounts to encourage development of innovative solutions to contain the use of mule accounts. Another initiative in this direction is the AI/ ML-based model called MuleHunter.AI, piloted by Reserve Bank Innovation Hub (RBIH), a subsidiary of Reserve Bank. This model enables detection of mule bank accounts in an efficient manner. A pilot with two large public sector banks has yielded encouraging results. DFS Secretary emphasized the need for regulators and banks to work collectively in curbing digital financial frauds, it said, adding, sharing of good practices across the banking sector was highlighted to ensure a unified and effective response.

RBI Rolls Out AI To Detect Mule Accounts

The RBI shared that it has already conducted a pilot programme with two major public sector banks, yielding promising results Doubling down on its efforts to combat financial fraud using artificial intelligence (AI), the Reserve Bank of India (RBI) has introduced an AI/ML-powered model called MuleHunter.AI to detect mule bank accounts. Developed by the Reserve Bank Innovation Hub (RBIH) in Bengaluru, this platform aims to assist banks in swiftly addressing the issue of mule accounts and curbing digital fraud, the RBI said in a statement post monetary policy committee (MPC) meeting today (December 6). Mule accounts are those bank accounts used for illegal purposes, such as money laundering, fraud, and other illicit activities. The RBI shared that it has already conducted a pilot programme with two major public sector banks, yielding promising results. "Banks are encouraged to collaborate with RBIH to further develop the MuleHunter.AI™ initiative and tackle the problem of mule bank accounts being used for financial fraud," RBI governor Shaktikanta Das said in a statement. Das also announced adding another medium of communication through podcasts. These initiatives are the latest in a series of measures taken by the RBI, in collaboration with banks and other stakeholders, to strengthen the financial sector's defences against digital fraud. Last month, it was reported that RBIH is in discussions with 10 public and private sector banks to accelerate the adoption of its artificial intelligence (AI)-powered platform to detect cases of financial fraud via "mule accounts". In addition to setting up multiple groups to tackle cyber fraud, the RBI established the cyber security and IT examination (CSITE) cell in 2015 under its department of banking supervision and created a fraud monitoring cell to publish a directory of officials responsible for fraud reporting in banks and financial institutions. RBI has also updated guidelines for banks, incorporating insights from the Indian cyber crime coordination centre. As per government data, Indians lost as much as INR 11,333 Cr to cyber fraud in just the first nine months of 2024. Notably, the country saw as much as 6.32 Lakh cases of UPI frauds worth INR 485 Cr in the first six months of the ongoing financial year 2024-25 (FY25)

Use MuleHunter.AI to check digital fraud: Govt to banks

The government urged banks to enhance their fight against mule accounts used in financial fraud. Banks were advised to implement AI/ML solutions, including the RBI-developed MuleHunter.AI, train staff, and raise public awareness. Collaboration between banks and regulators was emphasized to curb digital fraud.The government has urged banks to adopt best practices, leverage cutting-edge tools, and foster inter-bank collaboration to address mule accounts effectively. "Banks were directed to adopt advanced technologies, including AI/ML solutions, for real-time detection of mule accounts, training & upskilling bank staff on fraud detection and prevention, greater advocacy & awareness for common citizen for not to fall prey to the fraudsters," the finance ministry stated noting that the financial services secretary held meeting with banks and other stakeholders on Saturday. "Banks were also encouraged to explore and implement MuleHunter.AI, an AI/ML-driven model developed by RBI, to strengthen the detection and monitoring of mule accounts," it noted adding that financial services secretary emphasised the need for regulators and banks to work collectively in curbing digital financial frauds.

RB(A) I wants More Banks to Join Hunt for Mule Accounts

The central bank's innovation arm is in talks with ten public and private banks to further the adoption of its artificial intelligence (AI)-powered tool to detect rising cases of financial fraud through widely prevalent "mule accounts", a top executive said.The central bank's innovation arm is in talks with ten public and private banks to further the adoption of its artificial intelligence (AI)-powered tool to detect rising cases of financial fraud through widely prevalent "mule accounts", a top executive said. The Reserve Bank Innovation Hub's (RBIH's) platform, termed Mulehunter.Ai, has already been deployed by two large public sector banks, according to RBIH chief executive Rajesh Bansal. The trademarked platform was developed after identifying a total of nineteen patterns based on insights from multiple banks, he said. A mule account refers to a bank account that is used to receive and transfer funds acquired by illegal means. Typical patterns of misuse range from sudden transactions in a dormant account to multiple credits in an account followed by one large debit. RBIH conducted stakeholder consultations with ten banks to understand the traditional approach adopted by lenders in such cases. It found that most banks still use a rule-based system to identify suspected mule accounts, after which verification is done manually, which leads to significant loss of time. Bansal noted that early results -- after the deployment of the AI-powered tool -- have been "encouraging in terms of far better accuracy and cutting down the time taken". "If the percentage of accuracy of the manual system was x, this is 3x. If the time taken was y, this is o.1y," he told ET. In August, while addressing delegates at the Global FinTech Festival in Mumbai, PM Narendra Modi had urged regulators to take bigger steps to prevent cyber frauds and further digital literacy. "My expectation from regulators is that they need to do more to prevent cyber frauds and take more steps to improve digital literacy. Cyber frauds should not be allowed to impede the progress of the fintech and startup industries." RBIH's AI platform is meant to hasten the detection of fraudulent accounts. Pointing out that "there are multiple channels through which frauds occur, and they are no longer small sums and can be to the tune of Rs 1 crore these days", Bansal said they realised that "the best way would be to look at where the money eventually goes--to mule accounts". To be sure, the RBIH model will require continuous training and upgrade to ensure it can distinguish between mule and genuine business transactions. The aim of the Mulehunter.ai initiative is to accelerate technology adoption in the banking sector. Earlier this year, RBI governor Shaktikanta Das urged public and private sector banks to step up efforts against mule accounts and intensify customer awareness initiatives, among other measures, to curb digital frauds. India lost approximately Rs 11,333 crore to cyber fraud in just the first nine months of 2024, according to data from the Indian Cyber Crime Coordination Centre (I4C) under the home ministry. ET had reported on November 14 that banks are using AI to fight the growing menace of mule accounts, deploying AI tools to track suspicious patterns like dormant accounts receiving large credits or multiple accounts showing identical recurring transactions simultaneously. Financial technology companies such as Bureau, Clari5 and Datasutram are helping banks deploy AI-based fraud detection systems that can detect issues like mule accounts. Bansal said that if banks start using AI tools, it can gradually help address the issue.

Curbing cyber fraud: RB(A)I wants more banks to join hunt for mule accounts

New Delhi: The central bank's innovation arm is in talks with ten public and private banks to further the adoption of its artificial intelligence (AI)-powered tool to detect rising cases of financial fraud through widely prevalent "mule accounts", a top executive said. The Reserve Bank Innovation Hub's (RBIH's) platform, termed Mulehunter.Ai, has already been deployed by two large public sector banks, according to RBIH chief executive Rajesh Bansal. The trademarked platform was developed after identifying a total of nineteen patterns based on insights from multiple banks, he said. A mule account refers to a bank account that is used to receive and transfer funds acquired by illegal means. Typical patterns of misuse range from sudden transactions in a dormant account to multiple credits in an account followed by one large debit. RBIH conducted stakeholder consultations with ten banks to understand the traditional approach adopted by lenders in such cases. It found that most banks still use a rule-based system to identify suspected mule accounts, after which verification is done manually, which leads to significant loss of time. Bansal noted that early results -after the deployment of the AI-powered tool-have been "encouraging in terms of far better accuracy and cutting down the time taken". "If the percentage of accuracy of the manual system was x, this is 3x. If the time taken was y, this is o.1y," he told ET. In August, while addressing delegates at the Global FinTech Festival in Mumbai, PM Narendra Modi had urged regulators to take bigger steps to prevent cyber frauds and further digital literacy. "My expectation from regulators is that they need to do more to prevent cyber frauds and take more steps to improve digital literacy. Cyber frauds should not be allowed to impede the progress of the fintech and startup industries." Tech Adoption in Banking RBIH's AI platform is meant to hasten the detection of fraudulent accounts. Pointing out that "there are multiple channels through which frauds occur, and they are no longer small sums and can be to the tune of Rs 1 crore these days", Bansal said they realised that "the best way would be to look at where the money eventually goes--to mule accounts". To be sure, the RBIH model will require continuous training and upgrade to ensure it can distinguish between mule and genuine business transactions. The aim of the Mulehunter.ai initiative is to accelerate technology adoption in the banking sector. Earlier this year, RBI governor Shaktikanta Das urged public and private sector banks to step up efforts against mule accounts and intensify customer awareness initiatives, among other measures, to curb digital frauds. India lost approximately Rs 11,333 crore to cyber fraud in just the first nine months of 2024, according to data from the Indian Cyber Crime Coordination Centre (I4C) under the home ministry. ET had reported on November 14 that banks are using AI to fight the growing menace of mule accounts, deploying AI tools to track suspicious patterns like dormant accounts receiving large credits or multiple accounts showing identical recurring transactions simultaneously. Financial technology companies such as Bureau, Clari5 and Datasutram are helping banks deploy AI-based fraud detection systems that can detect issues like mule accounts. Bansal said that if banks start using AI tools, it can gradually help address the issue.

RBI Aims To Spur Adoption Of AI Tool Among Banks

The AI tool was developed after identifying 19 patterns, including sudden transactions in a dormant account, multiple credits in an account followed by one large debit, among others The Reserve Bank of India's (RBI) innovation arm is reportedly in discussions with 10 public and private sector banks to accelerate the adoption of its artificial intelligence (AI)-powered platform to detect cases of financial fraud via "mule accounts". Mule accounts refers to bank accounts used for illegal activities such as money laundering, fraud, and other illegal operations. Reserve Bank Innovation Hub's (RBIH) chief executive Rajesh Bansal told Economic Times that the AI platform, called Mulehunter.Ai, has already been deployed by two large public sector banks. He added that early results from the deployment of the tool have been "encouraging in terms of far better accuracy and cutting down the time taken". "If the percentage of accuracy of the manual system was X, this is 3X. If the time taken was Y, this is 0.1Y," Bansal said. The RBIH chief executive said that the AI tool was developed after identifying 19 patterns, including sudden transactions in a dormant account, multiple credits in an account followed by one large debit, among others. These patterns were identified after the RBIH conducted stakeholder consultations with as many as 10 banks to ascertain the traditional approach adopted by lenders while flagging mule accounts. The insights gathered from the meeting revealed that most banks still used a rule-based system. Under this, suspected accounts were first identified and then verification was done manually in each case, which led to significant loss of time. However, the new AI platform has been envisaged to speed up the detection of fraudulent accounts. "The best way would be to look at where the money eventually goes-to mule accounts," said Bansal, adding that there are multiple channels via which frauds can occur and the sum involved can be as much as INR 1 Cr "these days". The comments come months after RBI governor Shaktikanta Das, in July this year, urged public and private sector banks to shore up their security measures to crack the whip on mule accounts and digital frauds. Thereafter in October, reports surfaced that the central bank was looking to develop an AI-enabled system to alert individuals in real-time about financial fraud and enable banks and financial institutions to detect mule accounts. As per government data, Indians lost as much as INR 11,333 Cr to cyber fraud in just the first nine months of 2024. Just days ago, minister of state for finance, Pankaj Chaudhary, informed the Parliament that the country saw 6.32 Lakh cases of UPI frauds worth INR 485 Cr in the first six months of the ongoing financial year 2024-25 (FY25)